G20 nations dismiss transaction tax
Gordon Brown faces an uphill struggle if he continues to propose a transaction tax on banks
Sunday, 08, Nov 2009 07:29
By inthenews.co.uk staff.
A new tax on international bank transactions proposed by prime minister Gordon Brown, designed to avoid a repeat of the recent banking crisis, has failed to attract support from the G20.
At a meeting in St Andrews in Fife, Mr Brown proposed the new levy as a way to create an insurance policy against future monetary problems.
But it looks unlikely to get off the ground after several countries rejected it out of hand.
US treasury secretary Timothy Geithner said the idea is "not something we're prepared to support", while Canadian finance minister Jim Flaherty also spoke out against the proposal as "not an idea we would look at".
Mr Geithner added: "This idea has been around for a long time.
"Many countries have a lot of experience with the design of these kinds of taxes and the experience has been mixed."
Alexei Kudrin, Russia's finance minister, said he was "sceptical" and dismissed Mr Brown as someone "known for always raising taxes".
A more likely solution looks to be for banks to hold larger reserves of capital in order to prevent an economic crash and recession, which has been exacerbated by financial institutions' reluctance to lend.
According to experts, any introduction of a transaction tax would need to be worldwide, otherwise it is unworkable.